Mitigating Risks in the Solar Industry with Professional Liability Insurance

Author, Kevin Howard, Account Executive, Rancho Mesa Insurance Services, Inc.

Since the outset of the 21st century, the solar installation industry has been bustling with the demand to create clean sustainable energy. Based on growing political and ecofriendly needs, the solar industry is ever changing and trying to keep up with constant fluctuations when it comes to energy storage, federal and state regulations, and supply chain demands. Hand in hand with this growth is the risk created for solar installation contractors who are busy creating drawings, proposals and contracts. It is common for a solar contractor to purchase general liability insurance. It is commonly mistaken as the only needed coverage besides workers’ compensation and commercial auto insurance. However, general liability coverage needs to be triggered by either property damage or bodily injury. But, what about all of the potential lawsuits outside of property damage and bodily injury? This is where professional liability becomes an essential element to any solar installation contractor’s insurance program. To dive deeper, I have provided some claim examples that should resonate with any solar contractor performing residential or commercial installation.

Design Errors

Once a rendering is made that calculates the potential savings a solar system can generate, a contract is typically signed with the proposed energy savings. A solar contractor may face a claim if there is a design error. For example, a shaded area may have been missed that does not generate enough energy or the system might have been incorrectly positioned. A professional liability insurance product would be the best risk transfer vehicle for protection against this type of claim.

Failure to Comply with Building Codes

If a customer’s home cannot pass inspection because the work does not meet building codes, there could be a lawsuit and a claim which could trigger a professional liability policy.

Failure to Obtain Permits

If there are any nominal losses created from the lack of permits or timing of permits, a customer could file a lawsuit seeking damages. Since there is no bodily or property damage, a general liability policy would deny this type of claim. A professional liability policy would offer advice through third-party council to help mitigate losses fast in a time sensitive claim scenario.

Battery Storage

The State of California has high hopes to be petroleum free by 2050. This would mean that home battery systems would become essential for energy storage. Now imagine a family is counting on this system to make sure their vehicles are charged. This creates a lot of demand and if this battery was installed incorrectly, there could be claims having to do with losses sustained by that family. The scenarios are endless when you really think about it.

Maintenance Contracts

For some large-scaled solar installations, the energy created can be critical to business or for emergency lighting. If these systems fail to produce the proposed energy, in could cause a domino effect of a loss and/or costly lawsuits. Imagine a manufacturing plant relying on solar panels and battery storage that cannot create their product due to a faulty system. A professional liability policy could help mitigate the loss by adding in defense and counsel.

As the solar industry adapts and grows, the need for appropriate risk protection grows with it. Building an effective insurance program that includes professional liability is critical for all solar contractors considering the exposures referenced in this article. With a strong niche in this space, Rancho Mesa brings expertise and market knowledge that can help solar contractors transfer the appropriate risk, where necessary.

To discuss your risk management, please contact me at khoward@ranchomesa.com or (619) 438-6874.

Best Practice Controls for Solar Contractors

Author, Kevin Howard, Account Executive, Rancho Mesa Insurance Services, Inc.

As we continually build broad and competitive insurance programs for solar contractors in southern California, we recently interviewed a Senior Underwriter from a national workers’ compensation carrier in an effort to learn best practice controls for these types of risks. To our delight, this underwriter provided the top five controls their team looks for while reviewing a submission to quote. Having these controls in place can show an underwriter that your company deserves the best possible pricing available in the insurance marketplace:

1. Fall Protection

• A written fall protection plan is in place and available for review

• Employee training is documented

• A competent person is able to assess fall hazards through a written hazard assessment prior to installation

• There is familiarity with all fall arrest systems (e.g., yo-yos, ropes, lanyards, harnesses, and guardrails)

• Rescue procedures and training on rescuing is in place

• Assembly, maintenance, inspection, handling and storage of fall protection equipment is documented and organized

2. Responsive and Thorough Claim Reporting

• Claims are reported same day

• Claims are documented for future training opportunities

• Witness statements from co-workers are documented

3. Outsourcing Delivery of Solar Panels to a Third Party

• Minimizes the driving exposure to and from the jobsite

• Lowers the material handling exposure

• Reduces any potential lifting exposure while on a jobsite

4. Create a Smaller Radius of Work

• Lessening of your company’s driving exposure, which in turn can lower the probability of any car accident leading to a claim

• Company vehicles to return the same day which reduces any after-hours driving by employees

• Allows for vehicles to be monitored more easily

5. Health Benefits are Provided

• Lowers the probability of employees filing fraudulent  claims

• Increases overall employee wellness.

Some of these controls may be difficult or unrealistic to implement with your current business model. With workers’ compensation representing such a large line item on so many solar contractor’s profit and loss statements, engaging a forward-thinking insurance broker who can provide you additional resources and a clear renewal strategy is critical. At Rancho Mesa, we bring both of those tools to our relationships, utilizing our Risk Management Center to properly implement controls and our 20+ year history as leaders in the construction insurance marketplace.

To start a conversation about how we can assist your company, contact me at (619) 438-6874 or  khoward@ranchomesa.com.

Differentiating Solar Industry Class Codes

Author, Kevin Howard, Account Executive, Rancho Mesa Insurance Services, Inc.

Research conducted by the Solar Energy Industry Association (SEIA) shows that California benefits from roughly 3,000 solar contractors conducting business in the state. Panels are being installed at a rapid rate. In fact, statistics show that as of January 2018, over 5 million California homes have “gone solar” and that number continues to grow. Not only are solar panels used to generating electricity, they can also be used to heat water in pools, spas, storage tanks and other plumbing systems using hot water solar panels. 

With solar installation of all kinds becoming more prevalent throughout California, contractors must understand which workers' compensation classification is most applicable for their specialty. 

California’s Workers' Compensation Insurance Rating Bureau (WCIRB) breaks down solar installation into two categories: (1) Hot water solar collection panel install, service and repair, and (2) Photovoltaic (PV) solar panel install, service and repair.

Hot Water Solar Collection Panel Install, Service and Repair

Hot water solar collection panels absorb solar energy to heat water or to transfer fluid that circulates through panels. This hot water is then routed through pipes to pools, spas, storage tanks or hydraulic heating systems. The installation, service or repair of solar water panels is assigned to workers' compensation class code 5183/5187 for plumbing.

PV Solar Panel Install, Service, and Repair

This classification applies to the outside installation, service or repair of electrical machinery or auxiliary apparatus, including but not limited to automated security gates, transformers, generators, control panels, temporary power poles at construction sites, industrial fans or blowers, photovoltaic solar panels, wind powered generators and industrial x-ray machines. Contractors who are installing, servicing or repairing PV solar panels will be assigned to the class code 3724(2) in electrical machinery or auxiliary apparatus. 

The workers compensation base rates for each of these two class codes can vary widely from one carrier to another. Solar installation exposures, a detailed description of operations, and appropriate safety measures utilized must be clarified with your insurance broker so that your firm is properly placed in the appropriate code. The difference can often represent significant savings.

Rancho Mesa Insurance Services, Inc. has expertise in the solar contracting arena, representing clients that cross into both categories. Consider Rancho Mesa for a policy review and audit in advance of your next insurance renewal.